Time Warner Inc posted a flat quarterly profit but its revenue decline was smaller than expected, as a rise in cable networks revenue offset declines in advertising sales at AOL and Time Inc.

Shares of the media conglomerate rose 5.1 percent in premarket trading on Wednesday, after it also reaffirmed its 2009 outlook.

Net profit from continuing operations was roughly flat at $555 million, or 46 cents a share, compared to $548 million, or 46 cents, a year earlier.

Adjusted profit for continuing operations was 45 cents, down from 48 cents a year ago.

Wall Street analysts had on average forecast profit excluding special items at 39 cents, according to Reuters Estimates, but it was not immediately clear if that was comparable due to a range of restructuring expenses.

This is the first quarter that Time Warner is reporting earnings since separating from its cable unit, Time Warner Cable Inc , on March 12.

Chief Executive Jeffrey Bewkes is trying to reshape the company back into a traditional media company consisting of cable networks like HBO, CNN and TNT, the Warner Bros film studio, and publishing units. Revenues at this newly defined content group declined 4 percent.

Bewkes said in a statement that management is working to determine the right ownership structure for AOL, which he is expected to separate either in a spin-off or combination with another company later this year.

The results were pretty good overall, said Thomas Eagan, analyst at Collins Stewart. The revenue was better than we expected.

First quarter revenue fell 7 percent to $6.9 billion, but it was higher than the average analyst forecast of $6.75 billion, according to Reuters Estimates.

Revenue at AOL fell 23 percent to $867 million, while revenue at Time Inc fell 23 percent to $806 million as advertising sales continued to decline.

I think they're really trying to isolate the non-AOL divisions to show what the company might look like next year, Eagan added.

Warner Bros revenue fell 7 percent to $2.6 billion, primarily due to lower DVD sales.

Revenues at the cable networks unit rose 6 percent to $2.8 billion, thanks to a 9 percent rise in subscription revenues which offset a 2 percent decline in advertising revenues.

Time Warner had warned in February that first quarter sales and profit would likely fall due to the difficult U.S. economic environment.

It reaffirmed full year 2009 outlook, saying its adjusted earnings per share would be flat with 2008 at $1.98.

Shares of Time Warner rose 5 percent to $22.90 in premarket trading.

(Reporting by Yinka Adegoke; Editing by Derek Caney and Tiffany Wu)

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